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Capacity honestly vital to buyers

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Posted on 5/08/2013 by Wayne Brophy FCILT

Procurement professionals value honesty in their suppliers, it appears, even if this means coming clean about limited capacity.

A poll taken by Supply Management found that nearly six out of ten buyers said they would not be concerned if they learned one of their suppliers was pulling out of other bids because it feared it could not cope with the extra work.

Indeed, in several cases this kind of action would actually have worked in the supplier’s favour, since a number of respondents said that they would respect the bidder’s willingness to admit that they were concerned.

According to Supply Management, director of the London Universities Purchasing Consortium Andy Davies responded by pointing to a recent incident where a supplier faced considerable embarrassment: ”What a pity G4S didn’t do this last summer with its contract to London 2012.“

Other responses suggested that they would be encouraged by the notion that suppliers were being realistic about their capacity to meet the demands of major projects, since this was likely to save valuable time and money for all parties.

But it is unlikely that a supplier’s decision to withdraw would be forgotten entirely, since one respondent said they would raise the issue at strategy meetings to understand the decision and gain a better sense of the supplier’s situation.

Nevertheless, two out of five procurement professionals did say that they would be worried about the supplier organisation’s ability to fulfil its existing contracts and deliver the goods or services that they required.

The news comes after Siemens withdrew its bid to supply rolling stock to the Crossrail project last month for similar reasons. According to the huge German manufacturer, it won several new contracts after its initial capacity assessment, meaning that its ability to meet the order for 600 new train carriages had been significantly reduced.

“To pursue another project of this scale could impact our ability to deliver our current customer commitments, something we believe would not be a responsible course of action,” the firm explained in a statement.

Bids for the Crossrail project are due to be submitted this month, with a supplier due to be appointed before the middle of next year.

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